A roundup of some of the North American equities making moves in both directions today
On the rise
Richmond, B.C.-based Photon Control Inc. (PHO-T) soared after announcing it will be acquired by Massachusetts-based MKS Instruments Inc. (MKSI-Q) in an all-cash transaction valued at approximately $387-million.
The transaction is expected to be accretive to MKS’ non-GAAP net earnings within the first 12 months post-closing.
Medical cannabis company Harvest Health & Recreation Inc. (HARV-CN) was up after announcing it will be acquired by Trulieve Cannabis Corp. (TRUL-CN) in a deal that values the company at about US$2.1-billion, as Trulieve looks to ramp up its operations.
Dealmaking in the cannabis industry has jumped in recent months as the prospect of U.S. legalization makes it easier for companies to capitalize on increasing appetite for pot products since the onset of the COVID-19 pandemic.
The deal will give Trulieve a foothold in Florida, Pennsylvania and Maryland, and in core markets including Arizona, where recreational adult use of cannabis was recently legalized.
Harvest shareholders will get 0.1170 of a Trulieve voting share for each Harvest subordinate voting share held, a 34-per-cent premium to the stock’s last close.
The combined business will have a retail network of 126 dispensaries across 11 states in the U.S., with a total capacity of 3.1 million square feet, according to Trulieve.
FireEye Inc. (FEYE-Q) rose as industry sources said the company was among those helping Colonial Pipeline to recover from one of the most disruptive digital ransom schemes reported.
The incident has drawn attention to how vulnerable U.S. energy infrastructure is to hackers. A prolonged shutdown of the line would cause prices to spike at gasoline pumps ahead of peak summer driving season, a potential blow to U.S. consumers and the economy.
“This is as close as you can get to the jugular of infrastructure in the United States,” said Amy Myers Jaffe, research professor and managing director of the Climate Policy Lab. “It’s not a major pipeline. It’s the pipeline.”
Colonial transports 2.5 million barrels per day of gasoline, and other fuels through 5,500 miles (8,850 km) of pipelines linking refiners on the Gulf Coast to the eastern and southern United States. It also serves some of the country’s largest airports, including Atlanta’s Hartsfield Jackson Airport, the world’s busiest by passenger traffic.
On the decline
Ensign Energy Services Inc. (ESI-T) fell after it reported a loss attributable to common shareholders of $43.6 million in its latest quarter as its revenue fell 43 per cent compared with a year ago.
The drilling and well servicing company says the loss amounted to 27 cents per diluted share for the quarter ended March 31, compared with a loss attributable to common shareholders of $29.3-million or 18 cents per diluted share a year earlier.
Revenue for the quarter totalled $218.5-million, down from $383.9-million in the first three months of 2020.
Ensign says its Canadian drilling operations recorded 1,846 operating days in the first quarter of 2021, down from 3,102 days in the first quarter of 2020, while Canadian well servicing had 9,090 operating hours, down from 12,233 hours a year earlier.
The company’s U.S. drilling operations had 2,581 operating days in the quarter, down from 5,141 days a year ago, while U.S. well servicing had 29,965 operating hours, down from 31,207 hours in the same quarter last year.
International drilling operations recorded 859 operating days in the first quarter of 2021, down from 1,438 days in first quarter of 2020.
Village Farms International Inc. (VFF-T) was lower with the premarket release of better-than-anticipated first-quarter results.
Revenue of $52.4-million, up 63 per cent year-over-year and ahead of the Street’s $51.6-million as cannabis retail sales rose 20 per cent quarter-over-quarter.
Adjusted EBITDA of $0.4-million, however, fell short of consensus estimate ($2.5-million) as net sales fell short of projections due to decreased in produce sales, which the company attributed to “the lowest pricing environments for tomatoes-on-the-vine and beefsteak varieties in the past ten years.”
“Net, net, while the market is not appreciating VFF’s 1Q21 results—the stock price was down (20 per cent) at the time of writing — we see this selloff as overdone. VFF’s drivers of value creation remain strong,” said Raymond James analyst Rahul Sarugaser in a research note.
Marriott (MAR-Q), which owns the JW Marriott and Ritz-Carlton brands, fell after it reported a lower-than-expected quarterly profit because of fewer bookings in its main U.S. market, but the business showed a sharp rebound in China, which is emerging out of the pandemic at a faster pace.
Analysts have said that major chains like Marriott and smaller rival Hilton will take longer to recover as they rely heavily on business travel, which remains weak due to border curbs in place in many countries.
Marriott, which gets nearly three quarters of its revenue from the United States and Canada, said its RevPAR, a key measure for a hotel’s top line performance, fell 46.3 per cent in the region in the three months ended March 31.
Greater China was the only market for Marriott to show positive occupancy growth, with RevPAR surging nearly 77 per cent.
“While recovery trajectories vary from region to region, the resiliency of demand has been most keenly demonstrated in mainland China, where occupancy is near the pre-pandemic level,” Chief Executive Officer Tony Capuano said.
Last week, Hilton said Asia, including China, was its only market with positive quarterly occupancy rates and the smallest year-over-year fall in RevPAR.
Marriott’s adjusted profit fell 33 per cent to US$296-million in first quarter, below market expectation of US$305.6-million, according to IBES data from Refinitiv.
Total revenue halved to US$2.32-billion and missed Wall Street estimate of US$2.36-billion.
Coty Inc. (COTY-N) was down as it biggest business that includes brands such as Burberry perfumes and Gucci foundations returned to growth in the third quarter after a tumultuous 2020, while the cosmetics maker’s net loss narrowed sharply.
The company saw its sales plummet last year, as stuck-at-home consumers found little use for makeup. Coty is now tapping into pent-up demand for luxury beauty products in China and the United States to offset the declines.
Sales at the company’s Prestige unit that makes Gucci lipstick and Philosophy skincare rose 6.5 per cent to US$600.6-million, the first rise in over a year.
Still, restrictions in certain parts of Europe, including UK and France, imposed to curb surging virus cases hampered demand for the company’s products in the third quarter. Sales for the region fell 7.8 per cent, while the Asia Pacific region, which includes China, rose nearly 28 per cent.
“We are starting to see some improvement in the UK ... seeing lockdowns being lifted will hopefully help us build in the fourth quarter,” Chief Executive Officer Sue Nabi told Reuters.
Coty is also hoping to mirror its success in China in the United States, as the country begins to reopen helped by speedy vaccine distributions.
Coty’s net revenue fell about 3 per cent to US$1.03-billion, in line with expectations, while the company broke even on profit.
Net loss attributable to common stockholders was US$18.5-million in the quarter ended March 31, compared with a loss of US$271.6-million a year earlier.
Inovio Pharmaceuticals Inc. (INO-Q) declined after it said on Monday its COVID-19 vaccine candidate was safe, well-tolerated and produced immune response against the coronavirus in all tested age groups as part of a mid-stage clinical trial.
The trial enrolled about 400 participants aged 18 years and older at 16 U.S. sites. The company said it has selected 2 mg dose for the phase 3 segment of the trial.
Inovio plans to file preliminary mid-stage results with the U.S. Food and Drug Administration (FDA).
Last month, the company said the U.S. government pulled the funding for a late-stage study testing its vaccine candidate and it would now conduct the trial largely outside the country.
In September, the FDA put the phase 3 portion of the mid-to-late stage trial on hold for more information on the device used to inject the shot
Tyson Foods Inc. (TSN-N) finished narrowly lower after it raised its full-year revenue forecast on higher prices for its meat products and strong recovery in demand from reopened restaurants and hotels across the country that also drove its second-quarter sales beat on Monday.
Higher raw material costs have led many U.S. meat producers, including Tyson Foods, to raise prices, while demand recovers following an easing of pandemic-led restrictions on dining out and increased preference for home-cooked food.
Tyson Foods now expects its beef division to post improved fiscal 2021 results compared to last year on the back of a near 2-per-cent rise in sales in the segment in the second quarter.
Overall, the company now expects fiscal 2021 revenue to be between US$44-billion and US$46-billion. It had previously forecast to touch the upper end of a range of US$42-billion to US$44-billion.
In the second quarter ended April 3, Tyson Foods’ sales rose about 4 per cent to US$11.30-billion from a year earlier. Analysts on average were expecting US$11.19-billion, according to IBES data from Refinitiv.
Excluding items, Tyson Foods earned US$1.34 per share, compared with estimates of US$1.12.
David Leeder